North Carolina ports explore adding wood pellet operations

By Adam Wagner, Wilmington StarNews

Published: Saturday, May 4, 2013 at 06:48 PM.

Although there are no final agreements for wood pellet facilities at North Carolina’s ports, the N.C. State Ports Authority board of directors last week voted to let officials continue working toward contracts with the companies that will build them.

Jeff Miles, the port’s executive director, will work in consultation with Danny McComas, the board’s chairman, to iron out details with Enviva Holdings for a facility at the Port of Wilmington and International Wood Fuels for one in Morehead City.

“You’ve got the legalese that has to be put together, and they have to finalize the final numbers and things of that nature,” McComas said.

A final decision could come as early as Monday, when the board is having a special meeting via teleconference.

Although nothing is final, documents provided to the board give a glimpse into what the wood pellet facilities could look like.

Enviva’s facility, for instance, wouldn’t cost the Ports Authority anything, as the company has agreed to foot the bill for an overhaul of a terminal that would make shipping wood pellets possible.

Wood pellets are an increasingly common source of energy in Europe, largely because of clean energy requirements. A study from Daniel Saloni of N.C. State’s Department of Forest Biomaterials estimated that consumption of pellets would leap from 8.3 million tons in 2009 to 17 million by 2015, and several of those producers have reached out to the Ports Authority.

Although there are no final agreements for wood pellet facilities at North Carolina’s ports, the N.C. State Ports Authority board of directors last week voted to let officials continue working toward contracts with the companies that will build them.

Jeff Miles, the port’s executive director, will work in consultation with Danny McComas, the board’s chairman, to iron out details with Enviva Holdings for a facility at the Port of Wilmington and International Wood Fuels for one in Morehead City.

“You’ve got the legalese that has to be put together, and they have to finalize the final numbers and things of that nature,” McComas said.

A final decision could come as early as Monday, when the board is having a special meeting via teleconference.

Although nothing is final, documents provided to the board give a glimpse into what the wood pellet facilities could look like.

Enviva’s facility, for instance, wouldn’t cost the Ports Authority anything, as the company has agreed to foot the bill for an overhaul of a terminal that would make shipping wood pellets possible.

Wood pellets are an increasingly common source of energy in Europe, largely because of clean energy requirements. A study from Daniel Saloni of N.C. State’s Department of Forest Biomaterials estimated that consumption of pellets would leap from 8.3 million tons in 2009 to 17 million by 2015, and several of those producers have reached out to the Ports Authority.

“Many of these companies have been in touch with the Authority to discuss development of port facilities to handle wood pellets via the Port of Wilmington,” according to a briefing prepared for the board. “Only Enviva, however, proposed to finance, design and build the facilities with no capital contribution from the Authority.”

Renovations to the Wilmington terminal could include building rail and truck unloading stations, two concrete storage domes and a ship loader/dock conveyor system. Enviva has experience building the terminals, having already designed one in Chesapeake, Va.

Per the tentative framework provided to board members, Enviva would lease the land for the facility from the port, paying lease fees per acre, as well as throughput fees per metric ton. Lease fees, though, would be waived for the first five years.

The pellet company’s lease and operating agreement could be conditioned on Enviva investing in two or three more plants in North Carolina, with output totaling at least 1 million metric tons per year. At that production, two or three trains a week would pass through the Port of Wilmington.

Currently, Enviva is manufacturing pellets at plant in Ahoskie, in Hertford County, and shipping them through the Chesapeake terminal. The company is also finishing work on a plant in Northhampton County that will ship from Virginia. While the Wilmington pellet facility wouldn’t cost the authority anything, it could spend up to $15 million to build the International Wood Fuels Facility in Morehead City.

International Wood Fuels, which will operate here as WoodFuels N.C., doesn’t have production taking place in North Carolina yet, but it plans to start shipping pellets from a facility in Sims as early as July 2014 and open a second plant in 2015.

Per its agreement, annual production will be at least 285,000 metric tons beginning in 2015, rising to 400,000 metric tons when the second plant is finished.

To create a facility that can handle the relatively low guaranteed production at Morehead City, the Ports Authority is planning to use the existing ship loader and rehab an existing rail unloading station instead of building new ones. The only new construction would be two domes, one for each pellet plant.

McComas wants the wood pellet facilities to get off the ground so the ports can begin to focus on internal infrastructure.

“We need to start making money. We start generating a cash flow so we can start investing in the ports, repairs and capital improvements that have been put off for too long,” he said.